One of the least understood aspects of NFL free agency is the use of franchise tags, which strike fear in the hearts of many NFL players. Here's a look at some of the details.

Who Can Receive the Tag

The NFL's Collective Bargaining Agreement allows each team to issue one franchise tag per season. They may use it on any player whose contract is expiring at the end of the season and who would be an unrestricted free agent when the new league year begins. It can also be used on players who would be restricted free agents; some sources suggested the Steelers had considered using the franchise tag on Mike Wallace.

When the Tag Can Be Used

There is a two-week window for assigning franchise tags that began this past Monday. The window expires on Monday, March 5.

How the Franchise Tag Works

The "tag" generally comes with a one-year contract based on the top five salaries at the position. People quoting the old CBA may mistakenly believe that it is simply the average of the top five salaries at the position the previous year.

As noted by ProFootballTalk.com, though, there is a new calculation in the current CBA that bases the franchise tender amounts at each position over the previous five years. The upshot of this is that franchise tenders in 2012 are lower than they were in 2011 and will likely stay relatively low until 2014, when the new TV contracts kick in to raise the salary cap.

It also allows the player, until he signs the tender, to negotiate with any team in the league regarding a new contract.

The One Big Catch on the Tender Amount

The one major exception to this rule is that the tender amount must be the greater of the standard number for a player's position and 120 percent of the player's cap hit the previous year. This is a problem for the Houston Texans, as it would make Mario Williams' tender amount over $20 million (120 percent of his large 2011 cap hit) rather than the franchise amount for linebackers of $8.8 million.

How Other Teams Can Sign a Tagged Player

If the player has not signed his tender, then he is usually free (with one exception; see below) to negotiate with other teams up until one week before the start of the draft. The player is then allowed to sign one offer sheet with a team. That offer sheet is then presented to the team that franchised the player, who then has seven days to choose whether to match the offer sheet. If they choose to do so, the player stays with his current team, and they accept all terms of that contract.

If they decline to match the offer, then the player leaves, and the team signing the offer sheet must cough up two first-round draft picks, one in the current year's draft and one the following year. (Thus, any team, such as Oakland, that lacks a first-round draft pick in either of those drafts is shut out of the franchise tag market.)

The cost for signing away a franchised player is so high, however, that it has not happened since before the last CBA was signed in 2006, and it is unlikely to happen this year, either.

Why Teams Use the Tag

The franchise tag can be used in one of two ways. On the one hand, it is often used to buy negotiating time and keep rivals at bay, as the New England Patriots did with Vince Wilfork in 2010. Teams have until mid-July to reach long-term deals with players they have tagged; if they have not done so, however, then the player can only sign the tender contract and cannot negotiate an extension until after the season ends.

On the other hand, it can be used to make sure that a player doesn't just walk away from the team, as the Oakland Raiders did with Nnamdi Asomugha in 2008 and the Indianapolis Colts did with Peyton Manning in 2010. The latter can be done by making the franchise tag exclusive, which prohibits the player from negotiating with any other team at the cost of even more money.

Why Teams Can't Always Use the Tag

The moment the tag is issued, the entire amount of the tag counts against the salary cap. Thus, a team cannot use the franchise tag if it would put them over the salary cap. This is a problem for teams such as the New York Jets, who may not be able to franchise nose tackle Sione Pouha.

Why Players Sometimes Hold Out

Once the player signs the tag, he is obligated to attend any and all practices and has no guarantees of future income beyond that season. In other words, the player is assuming a significant amount of risk. This often leads to protracted holdouts, such as Asante Samuel's holdout in 2007 after he was tagged.

Why Some Players Don't Hold Out

There are three reasons a player might not sign his tender:

First, once a player signs the tender, his contract for that season becomes fully guaranteed against skill, injury and salary cap maneuvers. It was a no-brainer for Matt Cassel to sign his franchise tender in 2009; it instantly guaranteed him almost 10 times what he earned on his rookie contract.

Second, few teams are willing to pay the two first-round draft picks required as part of the offer sheet. But teams are often willing to trade for such players for lower picks; such a trade can't happen, though, until the player signs the tender.

Finally, a team can rescind the tag if the player doesn't sign the tag. So a player holding out could suddenly find himself a free agent—after teams have already drafted players and signed the big names to contracts.

The Biggest Myth Regarding the Franchise Tag

Sportswriters often conflate two issues regarding franchise tags (as Patriots fans have seen recently regarding Wes Welker). They often write with the assumption that assigning the franchise tag is the same thing as a player playing under the franchise tender for that season. The first does not guarantee the latter, as we have seen numerous times in the recent past.

Players originally approved the franchise tag as a means to reduce the barrier to free agency: In exchange for allowing teams to hold a few players hostage, the rest of the league had free agency reduced from six years to four. There was a lot of talk about the NFL Players Association trying to get the franchise tag eliminated in the most recent negotiations; clearly, that didn't happen. That means that we'll be having an annual talk about the franchise tag for the rest of this decade.

Deadskins wrote:Two first round picks might not be too much to pay for a Drew Brees type player.

Generally you will have a deal in place with the player, and have to "work out" a deal with the team... generally the cost is less than what the comp on the tag ask for

So much for that Idea... Teams can't even talk to Brees.

A league source tells PFT that it’s the exclusive version of the tag, which prevents Brees from talking to any other teams — and which eliminates the risk of some other franchise offering Brees a huge contract and giving the Saints two first-round picks if the Saints choose not to match.